Mortgage REITs (mREIT): An Investment Guide
Over the past decade, as interest rates have essentially been pegged near zero, income-hungry investors have been attracted to higher-yielding equity classes such as: Master Limited Partnerships, Business Development Companies, and Real Estate Investment Trusts. One class of REITs in particular, mortgage REITs, has been especially popular thanks to its sky-high dividends, which often yield as much as 10% to 15% and sometimes pay out monthly. However, of all the various high-yield pass through equity classes, in which the company doesn’t pay taxes as long as it distributes almost all taxable net income to investors, mortgage REITs are by far the hardest to invest in successfully. Let’s take a look at why this equity class, while potentially [...]
Ventas (VTR): A High-Yield, High Quality Healthcare REIT
Over the coming decades, the aging of the U.S. population is going be one of the largest demographic and economic megatrends, creating potential investment opportunities for long-term dividend investors. Let’s take a look to see if Ventas (VTR), America’s second largest medical Real Estate Investment Trust, or REIT, could be a sensible choice for low risk investors to ride the coming financial wave of growing medical spending. Ventas stock has slumped nearly 20% over the last three months and offers a dividend yield near 5%, potentially providing an appealing entry point. Let’s take a closer look at the business for consideration in our Conservative Retirees dividend portfolio. Business Description Ventas is one of the two dominant players [...]
What Donald Trump’s Win Means for Dividend Stocks
Donald Trump stunned many investors around the world when he beat Hillary Clinton to win the U.S. presidential election. Markets initially tumbled in overnight trading, with the S&P 500 Index down as much as 5%. Many long-term dividend investors, me included, went to sleep excited for some incremental buying opportunities in the morning. However, we woke up disappointed. The market had made a complete U-turn and was roughly flat with its previous close within just minutes of trading. The S&P 500 ended up closing higher by roughly 1% on Wednesday and gained more ground Thursday, but there has been meaningful dispersion between sectors. Over the last two days, the best-performing sector beat the S&P 00 by [...]
CVS Health (CVS): A Quality Dividend Growth Stock On Sale or a Value Trap?
Despite the market’s recent pull back in recent weeks, the S&P 500 is still trading close its all-time high and at a historically elevated P/E multiple of 24.5. However, that doesn’t mean that there still aren’t great bargains to be found, even when it comes to high-quality dividend growth stocks. CVS Health (CVS) is a possible example. The company’s stock has declined 25% year-to-date, setting up an interesting investment case. CVS stock now yields 2.3%, well above its 1.4% average dividend yield over the last five years. Don’t let the low yield turn you off - management has increased the dividend by 25% per year over the last decade and raised the payout by 20% in 2016. [...]
How to Invest in Business Development Companies (BDCs)
Over the past few years, Business Development Companies, or BDCs, have proven very popular with yield-starved income investors. Given their sky-high yields, this is understandable. But it’s important for dividend investors to realize that this isn’t a “set it and forget it” industry, which means that successful long-term investing in BDCs requires being very selective about who you entrust with your hard earned money. Read on to find out just why these specialty finance stocks offer such juicy yields, but more importantly: who should invest in BDCs, what metrics matter the most to protect your capital, and what risks dividend lovers need to be aware of. These are especially important topics for conservative investors who are living off dividends [...]
Goldman Sachs (GS): Double-Digit Dividend Growth Stock or Value Trap?
Since the depths of the financial crisis, plenty of big banks such as Bank of America (BAC), Citigroup (C), and JPMorgan Chase (JPM) have managed to rebound nicely and beat the market. However, pure play investment banks such as Goldman Sachs (GS) and Morgan Stanley (MS) have lagged the S&P 500 by large margins. Stock Total Return Since March 3, 2009 Bank of America 381% Citigroup 311% JPMorgan Chase 290% Goldman Sachs 137% Morgan Stanley 102% S&P 500 259% Find out whether or not Goldman Sachs’ poor performance could represent a long-term buying opportunity or whether the poor stock performance is a sign of something rotten in this venerable financial institution. In other words, is Goldman [...]
Nike (NKE): A Quality Dividend Growth Stock Down Over 20%
Since its founding in sleepy Beaverton, Oregon, in 1964, Nike (NKE) has grown into the world’s most dominant sports apparel supplier, and 18th most valuable brand in the world. Along the way they have made countless long-term dividend investors very rich. In fact, from 2006 through 2015, Nike has returned 20.9% per year (including dividends) compared to the S&P 500’s 7.4% annual return. However, over the past year, concerns over slowing sales, increasing competition from the likes of Adidas (ADDDF) and Under Armour (UA), and falling margins have sent shares nose diving over 20%. Learn if the king of sports apparel could be unseated from its throne and if this recent sell off makes now a reasonable [...]
StoneMor Partners (STON): Another Lesson on Dividend Safety
StoneMor Partners (STON) was the latest master limited partnership (MLP) to shock investors with a distribution cut (learn about the main risks of investing in MLPs here). After increasing its distribution each year since 2005, Stonemor announced last week that its third quarter distribution would be reduced by 50% to 33 cents per share. Even worse, StoneMor’s stock collapsed 45% on Friday. Many dividend investors are wondering how this happened, especially after management’s comments about STON’s distribution less than three months ago on August 5th: “We are encouraged by the positive metrics we’re seeing from our recent sales initiatives and when combined with lower operating expenses, will allow us to continue providing attractive distributions to our unit holders.” [...]
Citigroup (C): Speculative Megabank or Future Dividend Growth Machine?
Citigroup (C) more than tripled its quarterly dividend earlier this year, but few people can forget the terror of the 2008-2009 financial crisis. Unlike our favorite recession-resistant dividend stocks, some of the world’s largest financial institutions were on the brink of utter collapse and threatened to plunge the global economy into a prolonged depression. Citigroup was among the largest of the megabanks to require a government bailout, with the US government pumping $45 billion into the bank in order to cover losses on $301 billion in toxic mortgage assets. However, since that time new regulations and a new management team at Citigroup have made an impressive, if still incomplete turnaround. This could create potential for long-term, deep value [...]
What Dividend Investors Need to Know about AT&T’s Time Warner Acquisition
AT&T (T) recently agreed to acquire Time Warner (TWX), and this deal has a number of implications for dividend investors. AT&T believes it is buying “the world’s best premium content” and now has the largest film and TV studio in the world. Assuming the deal isn’t blocked by regulators, Time Warner will represent roughly 15% of AT&T’s total revenues. While the strategic implications of this deal are very important, many dividend investors are wondering what it means for the safety and growth potential of AT&T’s dividend. Shares of AT&T have sold off more than 10% over the last month, signaling some skepticism over the acquisition, and currently sport a high yield of 5.3%. AT&T sent a [...]